By Kang Seung-woo
The low-income bracket has turned to private loans more than to financial institutions due to low credit ratings, Statistics Korea said Wednesday.
The statistics office said in its recent report that the lowest 20 percent of earners borrowed money from private loans the most, at 33.2 percent. Their dependency on banks stood at 32.5 percent; non-banking units accounted for 24.5 percent and insurance companies 2 percent. The data dates back to February last year, the latest available.
The lowest 20 percent of earners are those who annually make 6.78 million won ($6,034).
“As the low-income group’s credit rating is so low that they can’t borrow money from banks and tend to depend heavily on other sources,” said a state statistician.
The top 20 percent of earners whose average income is 88.21 million won took loans from banks the most, with the proportion coming to 67.3 percent, followed by the non-banking sector with 18.1 percent, while private loans accounted for just 5.5 percent.
The overall data showed that banks made up more than half of all loans at 55.8 percent.
Statistics Korea said that low-income earners face higher interest rates in getting a loan and overdue loans and refinancing due to the debt may have grown.